eBay Headed for a Collision in Car Auctions

Last week, eBay and privately held AutoTrader.com announced that they were calling an end to their partnership, which brought buyers from AutoTrader.com to eBay, as of the end of this year. At the time, the companies did not say why they canceled the deal.

AutoTrader.com seems to have drawn on lessons learned from its nearly three-year relationship with eBay to build the upcoming site. The site will incorporate many of the same features as eBay, but will add a number of differences to make it more appealing to buyers and sellers, said Chip Perry, CEO of AutoTrader.com.

Unlike eBay, Autotrader.com's site will charge only a listing fee, letting buyer and seller complete the transaction on their own.

"We're taking all the handcuffs off. We're making it easier for sellers," Perry said.

Part of this philosophical difference between the two sites shows up in their fee schedules. eBay Motors' sellers pay a $40 fee for each car they list on the site and another $40 fee for each one they sell through the site. In contrast, AutoTrader.com plans to charge sellers only a $50 listing fee per car, which it plans to discount for dealers and other sellers who list large numbers of vehicles on the site.

Perry believes that dropping transaction fees will be a big hit with sellers. Dealers especially resent having to pay such fees when they have deadbeat bidders, buyers who place winning bids but never pay for the goods they win, he said.

AutoTrader.com plans other options not found on eBay, including letting sellers end auctions early, listing on other sites during the auction, and allowing buyers to make "conditional" bids. Such offers would not be considered binding; instead, bidders would have the opportunity to get a car inspected or take it to a mechanic before being required to follow through on a purchase.